My New Blog

A Nation of Renters?

November 28th, 2012 7:17 AM

For many Florida buyers, getting a mortgage is necessary for buying a home or condo. But in today's tight credit market, it is not easy to qualify, even with historically low interest rates. Next year could be even more difficult if federal regulators adopt even tougher lending standards.

Here are some of the changes that are being proposed:

Increase down-payment requirements to 20%, reducing the pool of prospective buyers; raise debt ratios, making it more difficult for buyers to qualify; and set new standards for mortgage servicing, potentially increasing costs that would be passed along to consumers. Another issue is an international banking standard which will require banks to increase their capital based on the nature of their loans, and could limit their ability to issue mortgages.

Florida was one of the states most adversely affected by the wave of speculation and unsustainable mortgages, so there needs to be laws in place to be sure that it never happens again. Some of these new changes will eliminate a lot of mortgage products that caused all the problems, such as no-documentation loans.

However, the federal government will need to find a way to protect consumers without closing the door to homeownership. Otherwise, we will see a situation where first-time buyers, minorities and people who have lost a job for a short period of time will find themselves blocked out of the housing market altogether.

If there is not a balance and some compromise with these changes, we risk becoming a nation of renters in the near future.